DALLAS, Nov. 14, 2002 (PRIMEZONE) -- American Realty Investors, Inc. (NYSE:ARL) announced Thursday that the company reported third quarter net income of $6.30 million, or $.55 per share, on revenue of $38.92 million, for the three months ended Sept. 30, 2002, compared to net income of $446,000, or $.04 per share, on revenue of $45.80 million in the third quarter of 2001, due to increased gain on the sale of real estate and decreased other expenses.
For the nine months ended Sept. 30, 2002, ARI reported a net loss of $18.48 million, or $(1.62) per share, on revenue of $115.80 million, compared to net income of $10.12 million, or $1.00 per share, on revenue of $135.34 million, in the first nine months of 2001, due to increased income from operations and decreased other expenses offset by increased equity in loss of investees and decreased gain on the sale of real estate.
Income and sales and related expenses and costs for the third quarter and nine months of 2002 resulted in income from operations of $12.27 million and $33.82 million, compared to $13.53 million and $31.46 million in the 2001 periods, and included:
-- Income from rents of $26.54 million and $77.95 million, compared to $26.60 million and $76.35 million in the 2001 periods, due to higher occupancy at the commercial properties and increased occupancy and average rate at the Hotel Sofia that opened in 2001.
-- Property operations expenses of $18.52 million and $55.27 million, compared to $18.17 million and $57.72 million in the 2001 periods, due to increased commercial property expense as the result of an acquisition in 2002, offset by decreased hotel and land expenses.
-- Pizza parlor sales increased to $9.27 million and $27.55 million, compared to $8.72 million and $25.28 million in the 2001 periods, due to three new stores opening in 2001 and an increase in same-store sales. Cost of sales increased to $7.64 million and $22.39 million, compared to $7.16 million and $20.71 million in the 2001 periods. Gross margins increased to $1.63 million and $5.16 million, compared to $1.56 million and $4.57 million in the 2001 periods.
-- Land sales, cost of sales and gain on land sales of $18.68 million, $16.06 million and $2.62 million in third quarter 2002, compared to $8.23 million, $4.68 million and $3.55 million in third quarter 2001. Land sales, cost of sales and gain on land sales of $39.38 million, $33.40 million and $5.98 million in the nine months of 2002, compared to $41.81 million, $33.55 million and $8.26 million in the 2001 period.
Other income (loss) increased to losses of $4.09 million and $12.13 million in the third quarter and nine months of 2002, compared to losses of $2.32 million and $6.76 million in the 2001 periods, and included:
-- Equity in the loss of investees of $4.79 million and $14.02 million in the third quarter and nine months of 2002, compared to losses of $3.14 million and $8.43 million in the 2001 periods, due to increased losses by affiliates. Loss on sale of investments in equity investees was $531,000 in the nine months of 2002, compared to a loss of $387,000 in nine months 2001. No income or loss on sale of investments in equity investees was reported in the third quarter of 2002 or 2001.
-- Other income that increased to $190,000 and $516,000 in the third quarter and nine months of 2002, compared to a loss of $19,000 and income of $58,000 in the 2001 periods, due to service fee income, dividends and stock redemption.
Other expenses (excluding property operations expenses and costs of sales for pizza and land) decreased in the third quarter and nine months of 2002 to $22.84 million and $72.68 million, compared to $27.20 million and $78.74 million in the 2001 periods, and included:
-- Interest expense that decreased in the third quarter to $13.66 million due to lower amortization of deferred borrowing costs, and increased to $45.75 million in the nine months due to increased balances and higher interest rates on stock loans, compared to $16.13 million and $44.13 million in the 2001 periods.
-- General and administrative expenses that decreased to $3.32 million in the third quarter due to reduced cost reimbursements paid to the advisor and increased to $9.80 million in the nine months due to higher legal fees, compared to $4.61 million and $9.08 million in the 2001 periods.
-- Advisory, net income and incentive fees that decreased to a total of $1.57 million and $4.83 million, compared to $1.95 million and $13.09 million in the 2001 periods, due to a reduction in total assets and 2002 net income not meeting the threshold of 10 percent of annualized net income in excess of a 10 percent return on shareholders' equity. No income or incentive fee is paid unless net income has met the 10 percent threshold.
-- Minority interest expense that decreased to $436,000 and $2.0 million, compared to $1.0 million and $2.48 million in the 2001 periods, due to the repurchase of partnership units in 2001 and 2002.
-- Write-down of assets held for sale of $445,000 for the three and nine months on the reduction of carrying value of a shopping center to its net realizable value when sold.
Net income from discontinued operations (non-land properties sold) in the third quarter increased to $21.56 million and decreased in the nine months to $34.31 million, compared to $17.05 million and $66.02 million in the 2001 periods, and included:
-- Gains on the sale of real estate that increased to $15.38 million in the three months and decreased to $23.14 million in the nine months of 2002, compared to $12.33 million and $54.60 million in the 2001 periods.
-- Equity in gains on the sale of real estate by equity investees was $6.62 million and $14.90 million in the third quarter and nine months of 2002, compared to $6.59 million and $17.97 million in the 2001 comparable periods, due to reduced gains on property sales by affiliates.
American Realty Investors, Inc., a Dallas-based real estate investment company, holds a diverse portfolio of equity real estate located across the U.S., including office buildings, apartments, hotels, shopping centers and developed and undeveloped land. For more information, go to ARI's website at www.amrealtytrust.com.
FINANCIAL HIGHLIGHTS
(dollars in thousands, except share and per share data)
Three months ended Nine months ended
September 30, September 30,
2002 2001 2002 2001
-------- -------- -------- --------
Income from rents $ 26,543 $ 26,601 $ 77,953 $ 76,353
Expense from operations 18,520 18,174 55,268 57,718
Operating income 8,023 8,427 22,685 18,635
Land sales 18,681 8,229 39,382 41,806
Cost of sales 16,063 4,682 33,401 33,546
Gain on land sales 2,618 3,547 5,981 8,260
Pizza sales 9,274 8,723 27,550 25,282
Cost of sales 7,645 7,164 22,392 20,715
Gross margin 1,629 1,559 5,158 4,567
Income from operations $ 12,270 $ 13,533 $ 33,824 $ 31,462
Other income (loss) (4,091) (2,319) (12,132) (6,757)
Other expense 22,836 27,198 72,681 78,739
Net loss from
continuing operations (14,657) (15,984) (50,989) (54,034)
Loss from discontinued
operations (436) (1,873) (3,724) (6,546)
Gain on sale of
real estate 15,375 12,334 23,140 54,600
Equity in gain on
sale of real estate
by equity investees 6,616 6,589 14,896 17,969
Net income from
discontinued operations 21,555 17,050 34,312 66,023
Net income (loss) $ 6,898 $ 1,066 $(16,677) $11,989
Preferred dividend
requirement (601) (620) (1,801) (1,868)
Net income (loss)
applicable
to Common shares $ 6,297 $ 446 $(18,478) $10,121
Earnings Per Share
Net loss from continuing
operations $ (1.34) $ (1.63) $ (4.64) $ (5.51)
Discontinued operations 1.89 1.67 3.02 6.51
Net income (loss)
applicable to
Common shares $ (.55) $ .04 $ (1.62) $ 1.00
Weighted average common
shares used to compute
earnings per share 11,375,127 10,193,217 11,375,127 10,141,840